Chapter IX of the Customs Act, 1962 provides for deposit of goods into a customs bonded warehouse licensed under section 57 or 58 or 58A without payment of duty and the procedures to be followed with respect to the warehoused goods. Sub-section (5) of section 59 provides that the importer is at liberty to transfer the ownership of such goods to another person while the goods remain deposited in the warehouse.
Trade has expressed doubts over applicability of GST when such Transfer of Ownership takes place, while the goods remain deposited in the warehouse. To clarify the issue CBEC issued a Circular No. 46/2017-Customs Dated 24th November 2017. The essence of the Circular decoded here in this article:
> Importer may deposit goods into a Customs Bonded Warehouse by filling into-bond Bill of Entry.
> Any costs incurred after the import of goods, such as, port charges / port demurrage charges or costs for customs clearing or transporting the goods from the port to the customs bonded warehouse or costs of storage at the customs bonded warehouse, cannot be added to the value of the goods, for the purpose of levy of duties of customs at the stage of ex-bonding – Sec 14 of the Customs Act, 1962.
> Rate of duty or tariff valuation for an ex-bond Bill of Entry shall be the date on which it is filed. There is no provision to vary the asses sable value of the goods at the ex-bond stage unless they are such goods on which tariff valuation applies – Sec 15(1)(b) of the Customs Act.
> Duties of customs (BCD + IGST) shall be paid on the imported goods at the stage of ex-bonding on the value determined under section 14 of the Customs Act.
> The transaction of sale / transfer etc. of the warehoused goods between the importer and any other person shall be treated as “supply” as per Sec 7 of the CGST Act, 2017.
> Such Transaction shall be taxable in terms of Sec 9 of the CGST Actread with Sec 20 of the IGST Tax Act, 2017.
> As per Sec 7(2) of the IGST Act, any supply of imported goods which takes place before they cross the customs frontiers of India, shall be treated as an inter-State supply. Thus such a transaction of sale/transfer will be subject to IGSTunder the IGST Act.
> The value of such supply shall be determined in terms of section 15 of the CGST Act read with section 20 of the IGST Act and the rules made there under, without prejudice to the fact that customs duty (which includes BCD and applicable IGST payable under the Customs Tariff Act) will be levied and collected at the ex-bond stage.
> That is when goods remain deposited in a customs bonded warehouse and are transferred by the importer to another person, the transaction will be subject to payment of IGST at the value determined as per section 20 of the IGST Act read with section 15 of the CGST Act, 2017and the rules made there under and the tax liability shall be reckoned as per section 9 of the CGST Act, 2017.
> It may be noted that so long as such goods remain deposited in the warehouse the customs duty to be collected shall remain deferred.
> Further, it is only when such goods are ex-bonded under Sec 68, shall the deferred duty be collected, at the value as had been determined under Sec 14 of the Customs Act, 1962in addition to IGST leviable when such warehoused goods purchased from importer.
Say “A” is an importer who put his imported goods into customs bonded warehouse. “A” sold such goods to “B”, when goods are still in warehouse. Then “B” pays IGST Twice
1. Once at the Time of purchase of Goods from “A”
2. Again when he makes Ex-Bond Clearance from Customs